Discover Flexible Financing with Private Mortgage Lending in Australia

Private mortgage lending is one of the most flexible and practical ways to secure finance in today’s Australian property market especially when traditional bank loans fall short. Whether you’re an investor, business owner, or buyer’s agent, understanding private mortgage options can help you act quickly and decisively when opportunities arise. This guide explains:

• What private mortgage lending really means

• How it differs from traditional bank lending

• When it makes sense to use it

• Practical tips for preparing a successful application

Start by understanding the difference between private and traditional lenders in our article on non-bank lenders vs traditional lenders in Australia.

What Is Private Mortgage Lending?

Private mortgage lending refers to loans provided by non-bank lenders typically private finance companies or specialised credit funds where the loan is secured by a mortgage over property. Unlike major banks, which rely on strict policy and serviceability criteria, private mortgage lenders assess the value and marketability of the asset, the exit strategy, and the purpose of funds to make lending decisions.

This makes private mortgage lending particularly useful for:

• Short-term settlement financing

• Auction acquisitions

• Second mortgages and equity release

• Complex property structures

• Transitional and bridge financing

If you’re exploring the broader non-bank lender landscape, read our overview of private lending in Australia.

How Private Mortgage Lending Differs from Bank Loans

Feature	Bank Mortgage	Private Mortgage
Primary Focus	Income & serviceability	Asset quality & exit strategy
Turnaround Time	Weeks	Days
Flexibility	Limited	High
Typical Term	Long-term	Short-term (3–24 months)
Use Cases	Standard purchase/refinance	Auctions, bridging, development

Private mortgage lending is not meant to replace traditional finance, but it fills gaps where banks struggle especially in time-critical or unique deals.

To learn how these two groups differ at a high level, see: non-bank lenders vs traditional lenders.

When Private Mortgage Lending Makes Sense

Private mortgage lending can be a strategic tool, especially when:

• You need funding faster than banks can approve

• Banks have declined due to policy constraints

• You’re funding an auction purchase or tight settlement

• You need to unlock equity quickly without refinancing a senior loan

• The property or transaction doesn’t fit standard lending models

These use cases often involve products like:

• Bridging finance

• Second mortgage lending

• Development loan finance

• Secured business loans

All of these tools are designed for business or investment purposes, not personal consumer loans.

Key Benefits of Private Mortgage Lending in Australia

1. Speed

Private mortgage lenders can issue indicative terms within 24–48 hours once the asset and exit strategy are clear. This makes them ideal for fast-moving markets, including auctions and short settlement situations.

2. Flexibility

Lenders can consider non-standard assets — for example:

• Older buildings

• Mixed-use strata titles

• Unusual property types

• Equity release when banks won’t lend more

This contrasts with the rigid policy boxes of traditional banks.

3. Asset-Based Decisions

Private lenders prioritise the quality and marketability of the asset over traditional serviceability criteria like income history. This enables approvals where banks might decline.

4. Custom Structures

Lending can be structured to match transaction needs, including:

• Interest capitalisation

• Mixed security

• Cross collateralisation

• Short-term bridging

Typical Private Mortgage Loan Structures

Private mortgage loans vary by case, but typically include:

• First mortgage facilities — Primary security position

• Second mortgages — For unlocking equity

• Bridging loans — To bridge timing gaps

• Mixed security loans — Combining multiple properties

• Caveat loans — For urgent, short documentation cases

For details on different structures, see our guides to:

• First mortgage private lending

• Second mortgage solutions

Practical Tips for Success

1. Have a Clear Exit Strategy

Private lenders want to see a realistic plan to repay the loan — such as refinance, sale or business cashflow.

2. Provide Complete Documentation

A complete file accelerates approvals, including:

• Contract of sale

• Property valuation

• Existing mortgages and encumbrances

• Exit strategy evidence

3. Be Prepared for Due Diligence

Valuation and legal processes are part of the deal — typically faster than bank timelines but still essential.

4. Align Expectations on Term and Cost

Private finance is typically:

• Short term (3–24 months)

• Priced to reflect risk and speed

• Focused on execution, not cheapest cost

Frequently Asked Questions

Is private mortgage lending legal in Australia?

Yes. When structured correctly and for business/investment purposes, private mortgage lending is a well-established financing option.

Can private mortgages settle faster than bank loans?

Yes indicative terms can often be issued within 24–48 hours, and settlement can proceed much faster than bank approvals.

Do private lenders require security?

Yes. These loans are secured against property residential, commercial or mixed-use.

Is private mortgage lending more expensive than banks?

Rates can be higher, but the value lies in speed, certainty and flexibility especially for time-sensitive or complex deals.

Final Thoughts: A Strategic Alternative, Not a Replacement

Private mortgage lending is not designed to replace traditional finance it’s a strategic alternative when banks can’t deliver on time or structure.

If you’re exploring options for:

• Auction finance

• Short settlements

• Equity release

• Development funding

• Investment acquisitions

Start with our pillar guide: private lending in Australia.